Have you ever wondered what happens in the command control of a global macro hedge fund when the US stock market plunges 35% in just three weeks? As tragic events unfolded around the world, the pandemic ruptured the sequence of price action and devoured financial markets like a black hole. 

Through personal narrative and his investment team’s actual Slack messages, Alex Gurevich’s new book, The Trades of March 2020, documents his and his team’s frantic effort to survive this crisis. From the first terrifying days of loss both personal and professional to the team’s redoubled efforts to identify emerging opportunities, the book accounts for the crucial in-the-moment decisions and is a faithful record of the trading moves made in the unprecedented month of March 2020.

You’ll hear step-by-step the thinking and investment philosophy that led Alex’s team to survive and ultimately thrive during one of the most extraordinary challenges of our time.

Hey listeners, my name is Drew Appelbaum and I’m excited to be here today with, Alex Gurevich, author of The Trades of March 2020: A Shield Against Uncertainty. Alex, thank you for joining, welcome to The Author Hour Podcast.

Alex Gurevich: Thank you very much for having me.

Drew Appelbaum: Alex, help us kick it off. Can you give us a brief rundown of your professional background?

Alex Gurevich: Well, I’m a money manager, that’s what I would call [it] if people ask me what I do for life. My career started on Wall Street in 1997. Prior to that, I would call myself a mathematician. I have a Ph.D. in Mathematics but after graduate school, I ended up on Wall Street and I worked for several banks including Banker’s Trust, which became Deutsche Bank and later Chase, which became JP Morgan Chase.

In about 2007, I started my own, started to manage my own money, and manage investment firms like the one I’m managing right now, HonTe Investments, and this is where I gained my experience pertaining to Wall Street finance, broad range of financial installments, both trading and investing.

Drew Appelbaum: Now, it’s really interesting because a lot of people, when they write a book, they have it inside them for years and they’ve been thinking about it but this is a book that’s all about one month of last year. It’s pretty quick. What made you say, “Holy cow, what happened here? I need to write this down and share this with the world.” Were you inspired by something out there? Did you have just a need to — you saw something, you did something incredible, and want to share it?

Alex Gurevich: It’s interesting that you phrase it that way because it even ties up into my thinking about investment strategies. I tend to be a very long horizon investor and I tend to do trades that play out over many, many years. I’m very patient. I say all this, I don’t know what happens next month but it is a pretty good clarity what’s going to happen in the two to five-year horizon. You are framing, thinking about the book in the same way like something that you just state for several years. 

The interesting part about March 2020, the truly amazing events — amazing not in a good way but astonishing and predictable events, not just in the world but broader world but in financial markets specifically that certain things that normally take maybe two to five years to develop were developing within several hours. The types of shifts that were occurring in various dates of March 2020 when the pandemic onslaught caused financial markets to freeze up and basically global economy come to a halt, which is very unusual and kind of unparalleled to make history even compared to previous disastrous events, which cut slightly different, most likely but actually considerably different flavor. 

Things develop so quickly so almost like the amount of experience needed to write a book, which is normally accumulated over years was accumulated over 30 days. I think it was at the end of the month or March I said, “This month was just so intense, someone has to write a book about it.” First it was basically a joke I made, someone has to write a book about March 2020 and it took me maybe four or five months later that’s like, “Well, that someone could be me.”

Drew Appelbaum: Now, this actually isn’t your first book, you have another book out there. Do you want to tell us a little bit about the first one and maybe what the difference is between the two?

Alex Gurevich: Yes, thank you. My first book is called The Next Perfect Trade and the subtitle is A Magic Sword of Necessity. By the way, of course I had to have a shield in the subtitle on the second book, it was unavoidable. My first book is more oriented towards people interested in trading and investing, specifically in investing and global macro markets which it means investing more just on stock markets as most people who have limited access, things like people who just invest stocks, they think like financial markets are stock markets.

What I do is in my world, stock markets are just a tiny portion, tiny island in the vast ocean of financial instruments. The biggest of them being the interest rate markets and currency markets, there are also commodities and somewhere there, there is like stocks still.

They’re not just US instruments, they’re all over the world, so I invest in all sorts of financial instruments around the world. I wrote my first book navigating basically, delineating the strategic principles I’ve developed over my prior experience because by the time I wrote my first book, I already had over 15 years of experience in financial markets and I wanted to describe step-by-step my thinking around trade selection, how to build the components in your portfolio in such a way that each component is really perfect well attuned, well-honed trade like an arrow rather than a hammer.

Something that — which is exactly the goal you’re trying to achieve and has a very probability of succeeding in the long run. I think the big difference between my first book and my second book is that my first book, you can think of it as a how-to manual, while the second book is more of a story of a personal journey.

A lot of it is about how my first book — [the] principles and ideas that I delineate in the first book applied to the real-world events in the second book, the real-world events covered in the second book. But it’s also a lot of the story of a personal, emotional, and psychological journey, which I touch upon that in the first book in terms of how to manage risk but not so much about how to manage stress.

Shield Against Uncertainty

Drew Appelbaum: Now, when you were writing this book, I know it wasn’t that long ago but I’m sure by doing research, you may be found some things that you didn’t know or that you just dug into a little bit more. So while you were writing the book, did you come to any major breakthroughs or did you have any major learnings?

Alex Gurevich: Well, one thing that is interesting is how human memory works. Even something that very recent events, which seem to be very clear and precise in your memory, you actually start writing down things like looking at the charts, looking at your numbers, you surprise yourself. “You’re like, “Oh yeah, well, I was sure that was how it was” but that’s not really how it was.

In reality, that’s what happened. One of the things that I try to — because you touched up on this, like what happens when you look back at things and look at them more carefully — one of the things I tried to accomplish with second book is give people this very precise, unedited, almost unedited story of what it looks like to be in the command center of a hedge fund.

Because people watch movies, they read books, there are all these TV shows and like Billions, — which is an excellent show, by the way — telling you about operations of a hedge fund but they have very little relation to reality. Like the way people talk, the trades they do, what actually happens is really looks nothing like what actually happens in the world.

Drew Appelbaum: Sure.

Alex Gurevich: Virtually, any of the literature. Then there are some pretty good account and they’re pretty good books, very good accounts by financial journalists but there are even

firsthand accounts by traders but all of them are very transformed by memories by perceptions, by biases.

What I try to give in this book is a chance for the readers to really be a fly on the wall and what I did to do that is I published all the transcripts from our trading channel, which allows to see our internal chatter as things developed. You can see step-by-step, sweat by sweat, curse by curse, the development of this crisis.

Drew Appelbaum: Yeah, it’s a pretty interesting way of doing it and so I do want to dig into the book now. March 2020 comes around, closures begin, quarantines begin. As a trader, what’s going through your mind and when you see something that’s sort of world-changing, whether you know it’s going to last forever or last for a short time? Are there any facts you know for sure at the time?

Alex Gurevich: Well, the reason I called my book A Shield Against Uncertainty is because there was tons of uncertainty in the world. Overnight, if you remember, everyone has become an epidemiology expert, a pandemic expert. Everybody was like, talking about graphs and IR ratios, virus, press, cross-reactive immunity. It was on the tip of everyone’s tongue, at least in my field.

All hedge funds were doing their own research and trying to really understand what’s going to happen on the medical side of the events and to be honest, everything I thought at any point was pretty much turned out to be wrong.

I mean, I am very proud of the fact that I never expressed, almost never — maybe never is too strong a word but — I mostly refrained from expressing any pandemic or medical use on social media to my investors and focused on just managing the portfolio. As much as I had certain views in private, I managed to keep them mostly to myself and not give people incorrect information.

It was a very interesting time because, in January and February 2020, we already saw that something was happening pandemic-wise. I mentioned in the book, myself going to a convention and hearing an economist talk about projection that; it was end of January. They talked about projections of global growth for 2020 and they still have splitting the hair whether it’s going to be three and a quarter percent or three and a half percent and I’m sitting here in the back of the audience, “Hello, pandemic, Wuhan, anybody?”

On the other hand, at that time, I had very little concerns about my personal safety. Very little fear of how it’s going to affect my family and my personal life. What I really try to capture in the book [was] that transition from something happening somewhere to other people and I was just thinking, “How do we take advantage of it and how do we best position our portfolio for those events” to “Oh, this is happening to us, we’re on shut down, my kids are staying home.”

Drew Appelbaum: Right.

Alex Gurevich: “I have to wear a mask, I have to shelter in place,” and that is a very major transition for a money manager who used to operate all is at arm’s length like, invest in some countries that I have never even visited. I very often trade currencies and other positions in countries that I’ve never been to.

It’s very different from trading the events that are happening to you now and affecting your personal safety and you’re nervous, not just because of what is going to be the PNL, what the PNL swing tomorrow, but whether any of your family’s going to be sick tomorrow.

Drew Appelbaum: Right. Does that change your overall strategy? It seems like you have a method that’s tried and true but all of a sudden, the world has changed. Did work change with it? 

Alex Gurevich: I have tried to stick to my strategy and one of the big takeaways from the book is, was that sticking to strategy did succeed. You asked me earlier what things helped through. One of my most important strategic tenants which is you don’t try to forecast tomorrow, don’t try to forecast next month. Let’s look at the whole universe of financial markets and see what is most likely to be true two or three years from now.

That held extremely well. In the middle of all this commotion, if you stuck with thinking, “Okay, let’s just step aside from this. There’s a pandemic now. At some point, the pandemic will be over, one way or another. What is certain to happen?” There were plenty of opportunities to take advantage of that, plenty of opportunities to either preserve your capital if that is what you need to do for your investors or to throw the capital is what you need to do for your investors.

That set of principles are called, I called a shield against uncertainty. I feel that having written my first book and also having traded through both 2001 crisis for both of September 11th which was different but had a lot of similarities to pandemic crisis and having lived and traded through the global financial crisis, gave me the set of ideas of how to operate in this events of extreme tragedy and commotion and distress and disruptions in the market and how to see through the panic to what is certain to happen several years from now.

March 2020

Drew Appelbaum: Now, did you feel strange even starting to write and even finishing the book, kind of still, while we’re living through this and really not knowing the end game of the whole pandemic?

Alex Gurevich: It is a little strange and it is even stranger because when I started to write a book which was, I would say about a year ago, I started to write a book and I started by saying, “I feel a little strange writing it. By the time it gets published we’ll probably know how the pandemic ends,” but actually we don’t. But back then when I started to write it, we didn’t even — I didn’t even know the vaccine situation yet. 

Drew Appelbaum: Right. 

Alex Gurevich: But it was not clear how soon will be the vaccines, how well they would work. It was pretty clear that there would be vaccines but it was not really clear how they would work and how they would be distributed. I have been biased to think back then the pandemic would be probably done by now and it is not. I was even thinking that who knows, maybe by the time this book is published, something else will be the problem. People will forget about the pandemic. 

Drew Appelbaum: I wish. 

Alex Gurevich: But nope, people are still talking about the pandemic. It’s still with us. 

Drew Appelbaum: Sure.

Alex Gurevich: It is strange. It’s kind of like writing a story not knowing how it ends. 

Drew Appelbaum: Right. Now, how much did the government affect what you were doing on a day-to-day and any moves they made? Because it seems like they moved quick and often not always in the right way but they made a lot of moves during that March period.

Alex Gurevich: Well first and foremost, everything I do for at any time from the very beginning of my career is very strongly affected by the Central Bank policy, so I follow very closely Central Bank policies all around the world. Of course, the Federal Reserve being the pre-eminent central bank of the United States. It’s the pre-eminent bank central bank of the world and their actions were very much in the realms of what was driving liquidity situations in the world. 

I always felt that central banks and governments could be, should be, viewed as just other market forces. You’re going to have this happen and you could have some Jane Doe buying or selling something from her home on the computer or you could have Central Bank buying and selling the treasuries on just a much bigger scale, right? Those have people who come to the market to do things to move them.

Obviously, the government has much more power and they should be viewed as one of the market forces. I think one of the disagreements I had with people for years, there are people who complain about central banks distorting the markets and destroying price discovery and not letting people trade as they should but making people almost like somehow making the markets rigged because they interview the financial markets. 

My view has been always, “No, they’re just being one of the market forces.” You have to account for that market force. If you don’t, you do it at your own peril but if you want to have a complete understanding of the world and your account for everything that happens including government intervention. 

Drew Appelbaum: Did you see anything during that month of March that absolutely truly surprised you? 

Alex Gurevich: Well, multiple things. The most amazing probably event, the most amazing single market event if you talk about financial market specifically, I write about this at the end of the book and actually something that happens not so much in March. It happened in April but it was set out by the end of March is the oil price traded to oil trading at negative price. That is something I didn’t think I would see in my lifetime. 

I was watching on the screen as the price of oil futures for delivery was falling, falling, falling, went to zero, went to negative. So it started like — for people who do not follow oil prices, oil currently is maybe at somewhere slightly over $70 a barrel. Back then, it was already going down to $40 a barrel, $30 a barrel and then goes to zero then it goes to -10, -20, -30, -40. 

Basically, you had to pay a tremendous amount of money to get oil off your hands if you had it because there was no way to store it. 

Drew Appelbaum: Wow. 

Alex Gurevich: It’s a technical situation but you know that time watching it, it was like watching some kind of crazy TV show because it’s like, you watch some kind of science fiction show and you see developing on the screens — and I think a lot of this — they were other technical examples I was talking about my book about Australian bond futures, about inflation of this bonds.

A lot of things that if you don’t just look at stocks and look all over the world at very specific instruments for somebody who traded them for decades, this was like watching — the whole month was like watching a science fiction movie. 

Recapturing the Intensity Of Rapid Change

Drew Appelbaum: Now, you mentioned that, and a really interesting part of the book is that you feature a lot of conversations you had via a Slack channel, which is instead of email it’s a communication tool that people use at work. I’m sure most people are familiar with it at this point. How was it talking to your coworkers about writing this book and featuring some of their comments in there? 

Like you said, there is some that are pretty expletive, so how was it getting those permissions, those okays and was there a few things that you had to leave out that maybe you didn’t need to be put in print? 

Alex Gurevich: I have definitely cleared it with all my coworkers. I have asked all of them if it would be okay and I got no push back on this but what I want to tell you that I felt very strongly that we should put the entirety of that specific trade channel in. We have several channels of communication within the firm but the channel for that execution, I really wanted to put the entirety so nobody could say that we cherry-picked something or put things like “this is the smart things that we said”. 

I wanted to put all the stupid things as well. However, we did have to redact just a few things, not so much for the cleanliness of conversation. I didn’t correct any typos or anything like this. All I wanted to redact is anything that violates client privacy or privacy or counterparts in any way. Anything that would violate privacy we’d have to redact and you actually see those black redactions as opposed — so we were very careful. 

The flow of the story will never be distorted. Honestly, probably as far as Wall Street goes, our theme was pretty clean in terms of that we do; when we curse, we don’t use too bad a language. It’s more of an emotion that comes through rather than loads of bad words. We try and do it that didn’t seem to be too much of a problem. 

Drew Appelbaum: Now, a reader goes through the book and do you hope it has a certain impact on them and is there anything in the book that you hope readers will take home with them and then take immediate steps in their life based on learnings from the book? 

Alex Gurevich: I think one of the broader aspects of this book is navigating stress and personal health when it comes to very intense both family and work situations and obligations that you need to make. I think that some of the — people who read them, some of my advanced reviewers have said that this book was almost too stressful to read because that brought back their PTSD of those events. 

Drew Appelbaum: Sure. 

Alex Gurevich: One of my friends even commented that he was almost glad that the book is coming out a little later because it was almost too stressful to read it right after March 2020 because it just made him sweat and kind of caught chas[ing] his breath when he was reading it because it kind of recaptured the intensity of those moments. I think what I — what I was really trying to come away with is the pressure that is associated with having to do something. 

By the way, if you think about this, I am a money manager but there are so many people who did essential work, which were — in some terms, money managers are essential because we have to make sure that the financial system is functioning and I had people’s retirement accounts that I had to watch over and make sure that that was the best of them. 

That was my obligation and I had to fulfill this obligation regardless of how I felt, how stressed or how tired I felt and this obligation that was more, even more important during the times of stress and anomalies. But things could be said and much more could be said about for example, workers in the medical field, right, who had to put themselves on the line and do all of those things while they have their own kids at home, staying home from work while they had concerns for their personal safety and they have to put in extra hours of work. My experience probably by far is not the most traumatic of people who went through the pandemic but I wanted to share what it was like for me when I had to work round the clock, waking up for almost a month, waking up every hour to check the markets and adjust positions and tried —

I didn’t have to set an alarm clock to do that; my body was waking up so far and was so stressed and so wired. I wanted to show people how to navigate out of it when you get caught on it. How to navigate out of it, how to release the stress, how to get to the other that there is light on the other side. How to get into a situation of balancing your personal and professional life, getting out of the stress, and getting to the point of health, kind of comprehensive health in your life.

Drew Appelbaum: Now Alex, we just touched on the surface of the book here but I just want to say that documenting this strange time and showing those conversations and showing the moves and almost in real time while you are kind of educating about investments along the way is no small feat and it just makes it for a very, very interesting read. So, congratulations on just documenting and putting all of this down and publishing your book. 

Alex Gurevich: Thank you very much for your support and thank you for having me and for you good questions. 

Drew Appelbaum: Not a problem and Alex, this has been a pleasure and I’m excited for people to check out the book. Everyone, the book is called, The Trades of March 2020, and you could find it on Amazon. Alex, besides checking out the book, where else can people connect with you? 

Alex Gurevich: I could be found on Twitter. I have a Twitter handle @agurevich23 also my firm’s website, www.honteinv.com. There are some information available to public there and if people could see some other articles and interviews that have been produced over the last several years. 

Drew Appelbaum: Well, Alex, thank you for giving us some of your time today and best of luck with your new book. 

Alex Gurevich: Thank you very much.